The middle-aged Honduran man had been a painter at Northrop Grumman Corp.'s Avondale shipyard for three years. He was a legal immigrant with proper work authorization. His employer had no complaints about his job performance.

But a month ago, he and 30 other Hispanic and Middle Eastern workers in similar circumstances were abruptly laid off.

"We were surprised," he said. "Everybody's got families and a lot of bills to pay. Now we're all looking for other jobs."

The painter and his colleagues were casualties of strict regulations governing defense projects that can lead to costly fines if a company allows certain foreign workers to see blueprints or other restricted material.

Avondale and its sister plants in Pascagoula and Gulfport, Miss., are building portions of 12 amphibious assault ships for the Navy. With the first ship almost ready for launch and more coming along, it soon will not be possible to effectively prevent workers from other countries from seeing restricted materials, said George Yount, vice president of operations at Avondale.

When it became clear that a single incident of someone seeing something they shouldn't could cost the company $500,000, he said, he had little choice.

"It was like cutting my finger off," said Yount, referring to laying off a group of men and women including skilled welders and other sorely needed workers.

In his desperation, Yount briefly considered erecting a fence across Avondale's property to keep the workers from seeing sensitive documents, but that idea proved unfeasible.

He called the workers together and told them that they were being "released," he said, but that they were welcome to return to their old jobs, without reduction in salaries or benefits, if they get their immigration status adjusted to something acceptable to the State Department within a year.

One person has already done so and is again working at Avondale, but it isn't as easy for others, he said.

Under the regulations, foreign-born workers who are involved in such projects must be either naturalized citizens, permanent or temporary residents, refugees, or those seeking asylum, Yount said.

A State Department official in Washington, D.C., said the rules that govern defense contractors, the International Traffic in Arms Regulations, flow from the Arms Export Control Act of 1968.

The State Department has not stepped up enforcement of the directives since the Sept. 11 terrorist attacks or because of the war with Iraq, she said. Instead, the agency always has been diligent in checking for compliance, the spokeswoman said.

Part of the concern behind the rules, Yount said, is that a foreign-born worker could pass information on the framework of the amphibious ship and the thickness of its walls to an unfriendly government, making the ship more vulnerable to an attack.

The project at Avondale is a lucrative one. The sixth ship alone is expected to cost $1.2 billion. The assault ships in production are capable of transporting about 800 Marines at one time, Yount said. They will contain advanced medical centers, as well as sophisticated "combat systems suites that allow you to see the battle scene going on around you, through satellite imagery and other means," he said.

And they are made to handle a new breed of aircraft being developed, V-22s, "which can take off as helicopters, then fold their wings and fly like planes," he said.

The company also is involved in designing Coast Guard vessels, which eventually will come under the same federal regulations, he said.

Eight of the laid-off workers are natives of Honduras who left after Hurricane Mitch devastated their homeland in 1998. They all have "temporary protected status," a special immigration designation granted to residents of Honduras and Nicaragua so they could work in the United States and send money home to help rebuild their countries, said Maria Eugenia Lobo, the Honduran consul general in New Orleans.

The painter who lost his job was one such worker, and he appealed to Lobo for help. But Lobo said "temporary protected status," which allows people to stay in the United States only for a designated period, isn't the same as "temporary resident status," a category for immigrants who plan to become permanent U.S. residents. There was nothing she could do.

"It's a sad situation, but with the security that has to be in place in this country, I understand," she said.